Statement of Basis - EPA Archives

1 1 Statement of Basis Draft Greenhouse Gas Prevention of Significant Deterioration Preconstruction Permit for Nuevo Midstream, LLC, Reeves County, Texas Permit Number: PSD-TX-1392-GHG October 2014 This document serves as the Statement of Basis (SOB) for the above-referenced draft permit, as required by 40 CFR This document sets forth the legal and factual Basis for the draft permit conditions and provides references to the statutory or regulatory provisions, including provisions under 40 CFR , that would apply if the permit is finalized. This document is intended for use by all parties interested in the permit. I. Executive Summary On January 22, 2014, Nuevo Midstream, LLC (Nuevo) submitted to EPA Region 6 a Prevention of Significant Deterioration (PSD) permit application for Greenhouse Gas (GHG) emissions to authorize a major expansion at its existing permitted facility, the Ramsey Gas Plant.

2 In connection with this same proposed modification, Nuevo submitted an application for a PSD permit for non-GHG pollutants to the Texas Commission on Environmental Quality (TCEQ) on January 21, 2014. Nuevo currently owns and operates the Ramsey Gas Plant, a natural gas processing facility located in Orla, Reeves County, Texas. The existing facility is comprised of the original plant (Ramsey I Plant), the 100 million standard cubic feet per day (MMSCF/D) Ramsey II Plant, the 200 MMSCF/D Ramsey III Plant and the associated 475-gallon per minute (gpm) and 1,300-gpm amine units. Nuevo is proposing to build three additional cryogenic plants (Ramsey IV, Ramsey V, and, Ramsey VI), each with a 200 MMSCF/D capacity, and associated 1,000-gpm Amine I plant and 1,000-gpm Amine II Plant.

3 After reviewing the application EPA Region 6 has prepared the following Statement of Basis (SOB) and draft air permit to authorize construction at the Ramsey Gas Plant. This SOB documents the information and analysis EPA used to support the decision EPA made in drafting the air permit. It includes a description of the proposed facility, the applicable air permit requirements, and an analysis showing how the applicant complied with the requirements. EPA Region 6 concludes that Nuevo s application is complete and provides the necessary information to demonstrate that the proposed project meets the applicable air permit regulations. EPA s conclusions rely upon information provided in the permit application, supplemental information requested by EPA and provided by Nuevo, and EPA s own technical analysis.

4 EPA is making all this information available as part of the public record. 2 II. Applicant Nuevo Midstream, LLC Ramsey Gas Plant 1221 Lamar, Suite 1100 Houston, TX 77010 Facility Physical Address: 231 CR 452 Orla, TX 79770 Facility Mailing Address: Box 9 Malaga, NM 88263 Contact: Mr. Dwight Serrett Vice President Operations Nuevo Midstream, LLC (713) 337-6510 III. Permitting Authority On May 3, 2011, EPA published a federal implementation plan that makes EPA Region 6 the PSD permitting authority for the pollutant GHGs 75 FR 25178 (promulgating 40 CFR ) The GHG PSD Permitting Authority for the State of Texas is: EPA, Region 6 1445 Ross Avenue Dallas, TX 75202 The EPA, Region 6 Permit Writer is: Ms. Nevine Salem Air Permitting Section (6PD-R) (214) 665-7222 3 Expansion Area IV.

5 Facility Location The Ramsey Gas Plant is located in Reeves County, Texas. The geographic coordinates for this facility area are as follows: Latitude: 31 55 Longitude: -104 01 Reeves County is rural with no large town or any significant manufacturing industry in the immediate area. Most of the county, including the area around the Ramsey Gas Plant, is a broad gently-sloping plain, with sparse grasses, scrub brush, cacti and mesquite. The nearest Class I area located within 100 kilometers (62 miles) or less are Guadalupe Mountain National Park, TX and NM, and Carlsbad Caverns National Park, NM. Below, Figure-1 illustrates the facility location for this draft permit. Current Gas Plant 4 V. Applicability of Prevention of Significant Deterioration (PSD) Regulations EPA Region 6 implements a GHG PSD FIP for the State of Texas under the provisions of 40 CFR (except paragraph (a)(1)).

6 See 40 CFR On June 23, 2014, the United States Supreme Court issued a decision addressing the application of stationary source permitting requirements to greenhouse gases (GHG). Utility Air Regulatory Group (UARG) v. Environmental Protection Agency (EPA) (No. 12-1146). The Supreme Court said that the EPA may not treat greenhouse gases as an air pollutant for purposes of determining whether a source is a major source required to obtain a Prevention of Significant Deterioration (PSD) or title V permit. However, Court also said that the EPA could continue to require that PSD permits, otherwise required based on emissions of conventional pollutants, contain limitations on GHG emissions based on the application of Best Available Control Technology (BACT).

7 Pending further EPA engagement in the ongoing judicial process before the District of Columbia Circuit Court of Appeals, the EPA is proposing to issue this permit consistent with EPA s understanding of the Court s decision. Emissions information contained in the PSD permit application submitted by Nuevo to TCEQ shows that the Ramsey Gas Plant expansion project is a major source because the Ramsey expansion project has the potential to emit tpy of NOx, which is a non-GHG regulated pollutant. In this case, the applicant represents that TCEQ, the permitting authority for regulated NSR pollutants other than GHGs, has determined the project is subject to PSD review for the following conventional regulated NSR pollutants: VOC, NOx, CO, PM10, and SO2.

8 The applicant also estimates that this same project emits or has the potential to emit 568,067 tpy CO2e of GHGs, which well exceeds the 75,000 ton per year CO2e threshold in EPA regulations. 40 (49)(iv); see also, PSD and Title V Permitting Guidance for Greenhouse Gases (March 2011) at 12-13. Since the Supreme Court recognized EPA s authority to limit application of BACT to sources that emit GHGs in greater than de minimis amounts, EPA believes it may apply the 75,000 tons per year threshold in existing regulations at this time to determine whether BACT applies to GHGs at this facility. Accordingly, this project continues to require a PSD permit that includes limitations on GHG emissions based on application of BACT. The Supreme Court s decision does not materially limit the FIP authority and responsibility of Region 6 with regard to this particular permitting action.

9 Accordingly, under the circumstances of this project, the TCEQ will issue the non-GHG portion of the permit and EPA will issue the GHG EPA Region 6 proposes to follow the policies and practices reflected in EPA s PSD and Title V Permitting Guidance for Greenhouse Gases (March 2011). For the reasons described in that 1 See EPA, Question and Answer Document: Issuing Permits for Sources with Dual PSD Permitting Authorities, April 19, 2011, 5 guidance, we have not required the applicant to model or conduct ambient monitoring for GHGs, nor have we required any assessment of impacts of GHGs in the context of the additional impacts analysis or Class I area provisions.

10 Instead, EPA believes that compliance with the BACT analysis is the best technique that can be employed at present to satisfy the additional impacts analysis and Class I area requirements of the rules related to GHGs. We note again, however, that the project has regulated NSR pollutants that are non-GHG pollutants, which are addressed by the PSD permit to be issued by TCEQ. VI. Project Description The proposed GHG PSD permit, if finalized, will allow Nuevo to build three additional facilities (Ramsey IV, V, and VI Plants) and associated Amine Plants (Amine I and II Plants). Nuevo Midstream core capabilities include gas gathering, treating and conditioning, compression, and processing. This expansion project will increase the processing capacity of the existing plant with three 200 MMSCF/D cryogenic plants and two 1,000-gpm amine plants, or equivalent, with combined rating being 2,000 gpm.